Contingency, Behavioural and Evolutionary Perspectives on Public and Nonprofit Governance: Volume 4

Taking a micro-perspective of governance that includes problem-solving and stakeholder involvement capabilities as part of the strategic steering role, we wish to contribute to the understanding of the human side of governance. Thus we have studied the relationships between the board and its management and stakeholders, and in so doing we recognize internal and external actors as well as the board itself, and how they all contribute to the implementation of the governance function.

Based on an interpretative approach that focuses on change over time, we performed a qualitative empirical study of the governance of Robotdalen, a small non-profit public organization in Sweden that is a joint public and private collaboration. This chapter forms part of a longitudinal study that has been carried out since 2009. It is based primarily on interviews with board members, management and other stakeholders, and complemented by document studies and observations.

Governance practice entails multiple and multilevel tasks, and the tensions between representativeness/professional boards, conformance/performance, and controlling/partnering up with management, are prevalent in both small non-profit and public organizations. According to our results the apparent choice between the extremes of each tension is, however, not a choice at all but rather a balancing act. In trying to balance tensions through collaboration between managers, board, financiers, and the hosting university, new governance structures and practices emerge at the organizational level.

By following the process of the emergence of a new board, we illustrate how various actors work together to co-produce governance functions in practice. In the past little or no effort has been made to take into account contextual factors such as organizational size – an aspect that may influence or shape board characteristics and work methodology. We therefore attempt to do so in our chapter, by studying the emergence of a new board in a small public organization, what possible paradoxes and tensions are involved in such work, and how such tensions are managed.

Given prior limited research on boards in clean-tech enterprises, we investigate what constitutes an effective board exploring in-depth: who the board members are, what roles they perform and how these roles are performed.

Our study is an inductive, multiple case study of five clean-tech enterprises established in Norway.

We find that board composition in terms of complementary resources that the top management team lacks added by outside directors, their increased engagement in the board service role and board behavioural integration are important constituents of board effectiveness, which in turn translates into the increased levels of the firm’s strategic action capabilities, both action speed and breadth.

We suggest that these three constituents (prevalence of outside directors, board service role engagement and board behavioural integration) together make up the board contribution, which is most valued by clean-tech enterprises in the earliest stages of their development. Future research could be conducted in other types of high-tech start-ups and/or in other hybrid social enterprises to strengthen the generalizability of our findings.

While the mainstream governance research focuses on for-profit boards in large established companies, our study adds to the research on non-for-profit governance and boards in clean-tech enterprises that are both small entrepreneurial and hybrid social enterprises.

Through an inductive approach, I examine the process in which autonomy is exercised in the board-executive director relationship. A further contribution of the current study is the exploration of the antecedents of the delegation process.

Utilizing the benefits of semi-structured critical incident interviews, and analysis of organizational documentation, I study the process in which autonomy is exercised in the board-executive director relationship.

Evidence is found within organizations of times when it is clear that board members understand that there are boundaries to their role, respecting this autonomy, and times when board members overstep their role. Next, in the current study, I explore the antecedents of the delegation process, including identification of role boundaries, role clarity, clear expectations, trust in the executive director, and trust in the governance control systems.

Autonomy has historically been examined within seemingly paradoxical frameworks; this has included investigating autonomy as part of the definition of laissez faire leadership, as a key feature of transformational leadership and as one component of the jobs characteristics model, while others have characterized it as a stream of shared leadership. In the current project, the process of providing autonomy takes on characteristics consistent with both vertical leadership and distributed leadership. The executive director similarly plays a role in maintaining previously defined role boundaries, which is evidence of bidirectional influence. However, the board plays a disproportionately larger role in delineating and maintaining role boundaries – characteristics I demonstrate as being consistent with transformational leadership.

In this chapter, I provide a refreshing divergence from typical board prescriptions, in that I examine the board-executive director relationship through a behavioural lens. A clear understanding of the mutual influence and antecedents of autonomy are important to practitioners seeking to enhance performance through the delineation of roles.

Defaults in corporations, financial institutions and semipublic organizations have resulted in (corporate) governance Codes and Law provisions that aim to improve governance, risk management and policy making by executive and non-executive directors of involved boards in The Netherlands and across the globe. The aim of this chapter is to discuss how semipublic organizations deal with public interest and the contribution of multiple stakeholder team production theory (MSTP) to effectively deal with the issue of how to include interests of different stakeholders and the general public interest in the governance of and policy making by boards of semipublic organizations. This includes the identification, raising awareness and analysis of various interests and their implications.

The authors use a literature review and their own experience.

Based on our literature review and experience converging in a case study design, we hold that a semipublic organization’s exposure to public interests and how it deals with that will remain a critical issue.

We develop a research approach for dealing with stakeholders’ and the public interest and conclude that a governance perspective grounded in team production theory allows for a much better focused incorporation of possibly conflicting stakeholder interests, including public stakeholder interests and stakeholder commitment and cooperation than the dominant control perspective that is currently prevailing.

We contribute to the literature by arguing that the combined MSTP approach offers a pre-eminent approach to influence and shape board behaviour, an increased awareness of interests of different stakeholders coalescing in the public interest and an alternative, complementary view on decision-making by boards viewed as a team.

The discussion about public sector performance is still present today, despite the profound research that has already tried to address this subject. Furthermore, theory links negative effects on organizational performance with increased levels of organizational complexity. However, literature thus far did not succeed to put forward a successful theory that explains why and how public organizations became increasingly complex. To answer this question, we argue that increased organizational complexity can be explained by viewing public organizations as the hybrid result of different institutional logics, which are shaped by various management views. However, former research mainly concentrated on the separate study of management views such as traditional public management (TPM), NPM, and post-NPM. Although appealing, research that approaches hybridity from this perspective is fairly limited.

We conducted a literature review in which we studied 80 articles about traditional public management, NPM, and post-NPM.

We found that these management views essentially differ on the base of three fault lines, depending on the level of the organizational culture. These fault lines, according to the management view, together result in nine dimensions. By combing dimensions of the different management views, we argue that a public organization becomes hybrid. Furthermore, in line with findings of contingency theory, we explain the level of hybridity might depend on the level of tight coupling for a given organization. Finally, we developed propositions that explain hybridity as the result of isomorphic forces, organizational change, and organizational resistance to change and that link hybridization with processes of selective coupling.

The value of this chapter lies in its real-life applicability.

There has been much debate in the literature regarding whether political pressures are beneficial or detrimental to public agencies’ performance and outcomes. This chapter explores under what conditions, if any, do political pressures have any positive effects.

A survey methodology and multivariate regression models are applied to assess the relationship between political pressures and public agencies’ performance and outcomes, using data from South-America and Europe. The theoretical scope is developed drawing from the public sector, management control, and goal-setting literatures.

The effects of political pressures on public agencies’ performance and public officers’ job satisfaction are moderated by technical certainty. At low levels of technical certainty political pressures have negative effects while at high levels they have positive effects.

All limitations of survey research apply.

Governments, public officers, and politicians should take into account the dynamics described in this study so as to limit the negative effects of political pressures and take advantage of the positive ones.

This is the first study to suggest that the effects of political pressures on public agencies vary depending on the nature of the task public agencies perform. The results reported here bring a new perspective to the literature, helping to clarify prior conflicting results. In addition, the fact that results are consistent for South American and European public agencies suggests that these findings might be generalizable across cultural boundaries.

This study attempts to analyze the role of governance mechanisms in municipal bankruptcy, which appears to be a neglected area of research. The analysis considers both the organizational level (micro) and the regulatory system (macro).

We use a relevant case of municipal bankruptcy in Italy to discuss the influence of governance characteristics, such as the political and management structure, interaction, and behaviors. The issues related to the accounting system and external audits are also considered. The data for this study are obtained from secondary sources such as audited budgetary reports, public documents, and reports from the Supreme Audit Institution.

The study indicates that the spoils system can favor the politicians’ exercise of power over public managers and undermine the capacity to prevent and manage financial distress. Poor accounting and weak control systems may facilitate this process. The high turnover of top management throughout a mayor’s term in office may reflect political pressure to force accounting rules and achieve flexibility to obtain the expected results or to correct poor financial performance.

To avert municipal bankruptcies, regulations should consider enforcing ex ante control by external oversight bodies, forbidding risky operations and limiting the spoils system for financial management positions and internal auditors.

Municipal defaults around the world have indicated that regulations and audits are ineffective to prevent local governments from failing. A full understanding of complex mutual interactions between the mechanisms of governance and the behaviors of politicians and managers can provide valuable insights to prevent local governments from failing.

The general aim of this chapter is to scrutinize implicit assumptions regarding leadership in the public sector entailed in the normative concept of “good governance.” We draw on the concepts of leadership substitution (Kerr & Jermier, 1977), managerial leadership activities (e.g., Bass & Avolio, 1994), and demands for leadership (Blom & Alvesson, 2014). In our empirical study, we explore fine-grained processes of leadership in several local government organizations, including everyday decision-making and social interactions.

A qualitative study was conducted on the basis of 21 interviews with middle- and lower level managers and their subordinates in five municipal departments in Germany and three in Lithuania.

The results suggest that everyday leadership processes can be considered as the coexistence of leadership substitutes and leadership interventions, initiated by the leaders and their subordinates. Such leadership substitutes like routines, laws, and instructions turned out as particular important constituents of leadership processes.

Results of our study open several new avenues for further research on governance and leadership in local governance organizations. First, future research can proceed with a re-conceptualization of leadership in the context of local governance by drawing on the follower-oriented approaches of leadership and governance. Particular focus on tensions, conflicts, and struggles as well as on the interrelationships between different hierarchical levels of public administration could represent a fruitful extension of our study. Second, the institutional and country-based contexts of local government systems should be taken into account more explicitly while studying leadership practices.

In terms of implications for practice, the results of the study call for an explicit consideration of the everyday activities while implementing “good governance.” Considerations of leadership as process of daily interactions between leading persons, subordinates and codes, structures, process rules, and management instruments should become a necessary element of such concepts, otherwise, important aspects of a “good governance” would be ignored and couldn’t be realized.

Our study contributes to the behavioral perspective of governance structures in the public sector by providing empirical insights from local government contexts and by re-conceptualizing governance and leadership processes. Instead of a merely reductionist concentration on managerial positions and persons, we propose a social-constructionist view on governance that allows for a more fine-grained, context-sensible perspective on governance in the public sector. Concretely, we call for a conceptualization of micro-level governance structures and processes mainly as a result of ongoing order-maintaining and order-negotiating processes between supervisors and subordinates, accompanied by institutions of leadership substitution and interventions from leaders and subordinates.

The main issue of stakeholders’ inclusion nowadays is the establishment of relationships between policy actors and creation of a supportive environment for stakeholder participation to allow a straightforward stakeholder inclusion with a meaningful contribution to policy making. The concept of a collective identity describing how shared values, shared activities and a shared identity lead to social cohesion between a large number of people, could suggest a hint for stakeholder empowerment. We argue that a proper inclusion leads towards empowerment of stakeholders only where efforts to build collective identity are allocated. Otherwise, stakeholder inclusion is only about static participatory governance where knowledge collection predominates over knowledge sharing and co-production. The goal of the present chapter is to trace formal governance networks as a participatory governance mechanism and analyse stakeholder perspectives to be empowered to act in a formal governance network presuming that the network structure creates an environment where a collective identity is being built.

The formal governance networks of 2013 led by the Ministry of Health, Ministry of Economy and Ministry of Education and Science were reconstructed on the bases of documents available in the organisations. The structure of the governance networks of 2013 is analysed as a precondition for an organisational collective identity to form.

The structure of the governance networks leads us to the conclusion that stakeholders are expected to be knowledge providers instead of being knowledge co-producers.

The networks demonstrate that the process of sharing knowledge and values is not recognised as an important element of participatory groups and efforts made to build a collective identity are too scarce.

Actors of territories faced with new managerial innovations have to develop new knowledge and behaviours to seize these innovations and create a vision of the territory. This is part of what we call governance learning: the ability of individuals to create new knowledge and behaviour for collective action within the territory. The purpose of this chapter is to explore this concept.

Drawing from a case study of a periurban territory in France, we analyse how the board members of a Community of Communes can learn to work together, articulating organisational learning theories, actor-network theory and the concept of organisational myths.

We explore the enrolment process necessary to ‘build’ the network and interest them in using the innovation; identify three types of governance learning that turn the network into a collective: sensemaking, instrument-seizing and sensegiving; show how these myths are necessary to turn collective knowledge into organisational knowledge.

With both a behavioural and evolutionary approach to governance, we show that power, relationships and learning processes are tightly intertwined within the governance networks. Our use of organisational learning theory also demonstrates how it can be used in a more systematic way to describe the learning processes witnessed in governance situations.

This research brings new light to the understanding of how territorial governance can be developed and how managerial innovations can provoke learning situations and more specifically how stakeholders learn to define common goals and a shared vision of their territory to enable collective action.